Retail Sales Up Sharply For Month

By Art PineDecember 13, 1978

The government reported yesterday unusually sharp increases in retail sales across the nation, both last month and in October - prompting economists to question earlier assertions that consumer spending is tapering off.

Commerce Department figures showed retail sales up a steep 2 percent in November to a seasonally adjusted $68,58 billion - up from a revised 1.3 percent jump in October that had been reported earlier as a 0.5 percent drop.

The robust performance, combined with a record growth in the number of news jobs reported for November, buoyed key administration ecomoists, who have been glumly lowering mists, who have been glumy lowering their forecasts for 1979.

One key official said that in light of the recent figures, White House economists were going back to their drawing boards. Private analysts have been forecasting a mild recession for 1979.

Particularly encouraging in yesterday's report was the disclosure that sales of durable goods-big-ticket items such as autos and refrigerators-climb 1.6 percent in November following a 2.3 percent rise the previous month.

With auto sales excluded, the overall increase in retail sales for November was 2.3 percent rise in October. Auto sales fell off somewhat in November fron their end-of-model-year peak.

Both the sales figures and the job statistics are key indicators of the economy's performance. Economists were unable to explain yesterday precisely why the figures were so robust. Both sets of numbers had been expected to slump.

The administration has been waiting for these and other late-breaking figures to revise its base economic forecast for 1979 and beyond. Until now, officials have been expected to concede there is a possibility of recession.

The White House has been insisting the economy will grow by about 3 percent or next year, enough to avoid a formal recession. Most private forecasters have been predicting a more sluggish growth rat of 1.5 to 2.5 percent.

The more pessimistic of these projections show two quarters or more of declines in the economy's overall output after adjusutment for inflaton-technically the definition of a recession, albeit a modest one.

However, if the economy continues to be stronger than expected in the next few weeks, some forecasters could end up changing their minds. The administraion is expected tp postpone its own forecast until late December.

Yesterday's report showed sales of nondurable goods also up sharply, rising 2.3 percent in October. Sales levels in November rose to a seasonally adjusted $44,88 billion.

November's increases left overall retail sales some 11.22 percent over their levels of a year ago The key durables component was up 14 percent over last year, with nondurables up 9.8 percent.

Yesterday's report came as a surprise to government officials, many of whom were gloomy about the outlook as late as a few hours before it was made public. The report of unusually sharp job growth earlier also was unexpected.

Most of the news on the economic front lately has been discouraging. Both wholesale and consumer prices have continued to rise sharply, and last week a survey of business investment showed spending likely to be flat in 1979.